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2018 (11) TMI 752 - AT - Service TaxClassification of services - business of development of residential projects - composite contracts - Revenue entertained a doubt, show caused and demanded the duty under construction of residential residential complex as against the services of works contract - period from February 2009 to June 2010 - Held that - The issue is already decide din the case of REAL VALUE PROMOTERS PVT. LTD., CEEBROS PROPERTY DEVELOPMENT, PRIME DEVELOPERS VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, CHENNAI 2018 (9) TMI 1149 - CESTAT CHENNAI , where it was held that The services provided by the appellant in respect of the projects executed by them for the period prior to 1.6.2007 being in the nature of composite works contract cannot be brought within the fold of commercial or industrial construction service or construction of complex service. For the period after 1.6.2007, service tax liability under category of commercial or industrial construction service‟ under Section 65(105)(zzzh) ibid, Construction of Complex Service‟ under Section 65(105)(zzzq) will continue to be attracted only if the activities are in the nature of services‟ simpliciter. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Classification of services for tax purposes. 2. Applicability of service tax on composite works contracts. 3. Interpretation of legal provisions and previous judgments. 4. Tax liability before and after 1.6.2007. Issue-wise Detailed Analysis: 1. Classification of Services for Tax Purposes: The primary issue was whether the appellant's services should be classified under "construction of residential complex" or "works contract." The Tribunal noted that the appellant's activities were composite works contracts involving both material supply and value services. The show cause notices and the revenue's calculations implicitly admitted this by calculating taxable value at 33% of the gross amount received, indicating the presence of both service and material components. 2. Applicability of Service Tax on Composite Works Contracts: The Tribunal referenced the Hon’ble Apex Court judgment in Larsen & Toubro, which held that composite works contracts involving both service and supply of goods were not liable to service tax before 1.6.2007. The Tribunal concluded that even after 1.6.2007, such contracts should be classified as works contracts and not as pure service contracts under commercial or industrial construction service or construction of complex service. The Tribunal emphasized that for a service to be classified under CICS or CCS, it must be service simpliciter, without any material or goods supply involved. 3. Interpretation of Legal Provisions and Previous Judgments: The Tribunal cited several precedents, including Real Value Promotors P Ltd, which had similar facts and legal issues. It also referred to the Union Finance Minister’s budget speech in 2007, which introduced an optional composition scheme for works contracts, and CBEC’s Circular 128/10/2010, which clarified the classification of services post-1.6.2007. The Tribunal found that the lawmakers intended to bring composite works contracts under the ambit of service tax only from 1.6.2007 through Section 65(105)(zzzza). 4. Tax Liability Before and After 1.6.2007: The Tribunal held that prior to 1.6.2007, composite works contracts could not be taxed under CICS or CCS. For the period after 1.6.2007, the Tribunal maintained that only services simpliciter could be taxed under these categories, while composite works contracts should be taxed under Works Contract Service as defined in Section 65(105)(zzzza). The Tribunal supported this conclusion with multiple case laws, including Commissioner, Service Tax, New Delhi Vs. Swadeshi Construction Company and Skyway Infra Projects Pvt. Ltd. Vs. Commissioner of Service Tax, Mumbai, which reinforced that composite works contracts should not be vivisected for tax purposes under different service categories. Conclusion: The Tribunal concluded that the revenue erred in demanding service tax under the category of residential service. It set aside the impugned order, allowing the appeal with consequential reliefs. The Tribunal's decision was based on a thorough analysis of legal provisions, previous judgments, and the nature of the appellant's contracts.
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